What is Cost Per Click (CPC)?

CPC works in a simple manner - advertisers bid on keywords related to their product or service, and the highest bidder gets to display their ad on search engines or other websites. When a user clicks on the ad, the advertiser is charged the agreed-upon CPC. The amount is typically based on the competition for the keyword, the relevance of the ad, and the target audience.

The most common formula for CPC is:

CPC = Campaign Cost/ Nr. of Clicks.

Different publishers or platforms, such as Google, use a different bidding process to set rates. For example, Google asks each advertiser the maximum amount they are willing to pay per click and utilizes ad rank thresholds to estimate the cost after your ad is clicked on.

Let’s suppose that your campaign had a cost of $70 and generated 100 clicks. In this case, the resulting CPC is $0.7/ click.

CPC is important for eCommerce businesses because it affects the cost of acquiring new customers through advertising. A high CPC can lead to higher advertising costs and lower profits, while a low CPC means the business is getting more value for its money.

To decrease your CPC, it's important to focus on keyword relevance and targeting. Advertisers can also use negative keywords, which are keywords that are unlikely to result in a sale. This helps to eliminate unnecessary clicks and reduce the cost per click.

Another way to reduce CPC is to optimize your ad copy and landing page. Ad copy should be relevant and compelling, while the landing page should be well-designed and provide a clear path to purchase.

Finally, it's important to regularly monitor and analyze your CPC. This can help you identify areas for improvement and make adjustments to lower your cost per click.